1. THE ARMSTRONG GROUP (SEP/DEC 15), how come in the calculation of collar, sell put figures are not calculated when interest rates increased to 4.1% while sell put is not calculated when interest rates fall to 3.1% ???
2. When we calculate collar portion, only first part of buying call is calculated whether it’s yes or no(in exercising option) ? it seems that in the answer sell put is not calculated whether or not it is yes or no(in exercising option) therefore this means only buy call is always calculated regardless of whether option is exercised
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8y ago#1The options are the right to buy or sell futures at a fixed price.
So we will only exercise the option if they make a profit - i.e if the sell price is higher than the buy price.
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